Lincoln National benefits from extended distribution relationships,
healthy restructuring and a diversified product portfolio. Improved
financial leverage also enhances capitalization, mitigates balance
sheet risks, aids incremental capital deployment and reflects fair
liquidity, scoring well with the ratings agencies and investors.
The first-quarter earnings also topped the Zacks Consensus
Estimate, banking on growth in deposits and account balances across
segments. Improved premiums and investment portfolio coupled with
higher retention and improved pricing also enhanced ROE. These were
partially offset by higher expenses and reduced net flows. Although
economic volatility, competition, and low interest rate environment
restrict the desired upside in the near-term, Lincoln National is
poised to grow in the long run, justifying our Neutral
Founded in 1904 and headquartered in Philadelphia, Pennsylvania,
Lincoln National Corporation is a diversified life insurance and
investment management company. Operating under the Lincoln
Financial Group name, the company's primary subsidiaries are
Lincoln National Life Insurance Company (LNL), First Penn-Pacific
Life Insurance Company, Lincoln Life & Annuity Company of New
York, Delaware Management Holdings, Inc., Lincoln National (UK)
Plc, Lincoln Financial Advisors (LFA), and Lincoln Financial
Lincoln National engages in multiple insurance and retirement
businesses in the United States, which include fixed and indexed
annuities, variable annuities, universal life insurance (UL),
variable universal life insurance (VUL), linked-benefit UL, term
life insurance, mutual funds and group life insurance. The company
also provides employer-sponsored fixed and variable annuities and
mutual fund-based programs single and survivorship versions of UL
and VUL, including corporate-owned UL and VUL and bank-owned UL and
VUL products to small and mid-sized banks and large-sized
corporations and group non-medical insurance products that are
principally for term life, disability and dental. Lincoln National
distributes its products through a range of intermediaries,
including financial advisors, consultants, brokers, banks, wire
houses, planners, third party administrators and other
intermediaries. As of Dec 31, 2013, the company had 9,115
employees. In addition, a total of 1,424 planners and agents had
active sales contracts with either of its insurance
The company provides products and services in three operating
businesses, which are as follows:
Annuities: focuses on offering tax-deferred investment growth
and lifetime income opportunities for its clients via fixed
(including indexed) and variable annuities. These contracts provide
payout alternatives for a steady income flow for life. This segment
accounted for 27% of the total operating revenue in 2013.
Retirement Plan Services: (formerly known as Defined
Contribution) focuses on investment and asset management services
for retail and institutional clients by offering wealth creation,
protection, and retirement planning products and services via
mutual funds, defined benefit and defined contribution plans along
with individual retirement account (IRA) markets. This segment
accounted for 9% of the total operating revenue in 2013.
Life Insurance: focuses on creation and protection of clients'
wealth through an array of life insurance products such as term
insurance, linked-benefit product (UL policy linked with riders
that provide for long-term care costs) along with both single and
survivorship versions of UL and VUL, including COLI and BOLI
products. This segment accounted for 42% of the total operating
revenue in 2013.
Group Protection: focuses on providing group non-medical
insurance products such as term life, disability and dental, to the
employer marketplace through various forms of contributory and
non-contributory plans. The segment accounted for 18% of the total
operating revenue in 2013.
Others: primarily focuses on the financial data for operations
that are not directly related to the business segments and other
unallocated corporate items. The segment accounted for 4% of the
total operating revenue in 2013.
Following a stronger foothold in the life insurance and annuity
arena, Lincoln National has been growing into other lines of
business to diversify its operations. In addition, the company has
disposed of its less profitable businesses or business lines in
order to strengthen its asset management operations, such as
pension plans, trusts and mutual funds. The operations were
enhanced in 2006 with the acquisition of Jefferson Pilot. In 2009,
Lincoln National sold its UK-based subsidiary and Delaware
Management Holdings, Inc. to shore up the capital base of its core
U.S. businesses. No acquisitions or divestments were made in 2010,
2011 and 2012.
In Jul 2009, Lincoln National successfully completed a
comprehensive capital plan (CCP) that included reduction in the
common stock dividend, disposal of certain subsidiaries and
issuance of common stock and debt. The steps were taken to
strengthen the capital position of its principal insurance
subsidiaries and provide liquidity to its holding company amid the
In Oct 2013, Lincoln National entered into a reinsurance treaty
to cover the new sales of its flagship variable annuity guaranteed
living benefit product. Per the deal, Lincoln National will offer
50% coinsurance on new living benefit guarantee sales up to $8
billion through Dec 31, 2014.
As of Mar 31, 2014, Lincoln National had assets of $241.9
billion, long-term debt of $5.38 billion and total shareholders'
equity of $14.48 billion.
Lincoln National Corp. (LNC): Read the Full
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